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Markets end 1.8% higher on foreign flows

Markets end 1.8% higher on foreign flows

Mumbai: Robust foreign fund inflows drove BSE Sensex to 33-month highs on Friday while strong auto sales in September pushed key auto stocks higher helping the benchmark index post its fifth weekly gain.

It was the biggest winning stretch in six months for the index but the steep rise has led to concerns about a correction soon.

The 30-share BSE index rose 1.87% or 375.92 points to 20,445.04 points, taking gains in the week to nearly 2%. The index is only around 800 points away from its record high. The 50-share NSE index gained 1.9% to 6,143.50.

It rose to as much as 20,475.47, its highest since January 2008. Twenty-seven of its components closed in the green.

“It is a liquidity-driven rally. But, what worries me is the way it is going, we may not see a pause, but it could turn out to be a reversal," said Ambareesh Baliga, vice-president of Karvy Stock Broking.

Foreign fund inflows of $18.2 billion has led the benchmark index 17.1% higher.

The index gained 13.4% in the quarter ended September, notching its seventh consecutive quarterly gain and the longest winning streak in at least 20 years.

India’s manufacturing sector continued to expand in September although at a considerably slower pace than in preceding months, predominantly weighed down by a fall in new orders and output, a survey showed.

Vehicles maker Tata Motors firmed nearly 2% after it said its September sales rose 23%, and it will hike prices on some passenger and all commercial vehicles from Monday due to rise in input costs.

Leading car maker Maruti Suzuki and top utility vehicle maker Mahindra & Mahindra raced 2.9% each.

Metals producer Sterlite Industries rebounded 5.1% after India’s Supreme Court on Friday stayed a lower court order to close Vedanta Resources’ copper smelter in south India.

Reliance Industries, which has been an underperformer in recent times in the absence of any near-term positives, climbed 2% in an attempt to catch up with the broader market rally. The stock, which has the highest weight on the Sensex, is down 7.6% this year.

Outsourcers rose after stronger-than expected economic indicators from China and the United States boosted confidence in the global economic recovery, dealers said. Leading software companies Tata Consultancy Services, Infosys Technologies and Wipro gained between 2.1% and 4.1%.

Two shares advanced for every share that declined in the broader market, on a strong volume of 516 million shares.

By 3:48pm, the MSCI’s measure of world equities and the more volatile emerging markets index edged 0.5 percent and 0.6 percent higher respectively.

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